Mini close-out - GMSLA Provision: Difference between revisions

Jump to navigation Jump to search

Mini close-out - GMSLA Provision (view source)

Revision as of 09:26, 28 August 2018

16 bytes removed ,  28 August 2018
no edit summary
No edit summary
No edit summary
Line 1: Line 1:
{{gmslaanat|9}}
{{gmslaanat|9}}
Mini close-out is the method of terminating an individual {{gmslaprov|Loan}} under a {{gmsla}} or an {{osla}} where there is a settlement failure without actually closing out the whole agreement. It is also a useful tool in getting optimal netting analysis in [[gross jurisdiction]]s, but that is not what the clause was inserted to do.
Mini close-out is the method of terminating an individual {{gmslaprov|Loan}} under a {{gmsla}} or an {{osla}} where there is a settlement failure without actually closing out the whole agreement.  


In a nutshell (and more detail can be found at [[GMSLA netting]] the idea is to call each loan (under a {{gmslaprov|Borrower}} or {{gmslaprov|Lender}}’s general right to do so under Paragraph {{gmslaprov|8}}) before designating an {{gmslaprov|Event of Default}} under Paragraph {{gmslaprov|10}} and effecting close out under paragraph {{gmslaprov|11}}. Note some deft manouevring is required to get mini-closeout to work where you have term {{gmslaprov|Loans}} in your portfolio (that is, {{gmslaprov|Loans}} which are not callable at will under paragraph {{gmslaprov|8}}) or where [[automatic early termination]] applies.
===[[GMSLA Netting]]===
Since prudential requirements to have [[netting opinion]]s do not apply within single transactions, one does not need a mini close-out provision to net within transactions under a GMSLA. That happens as of right. Therefore if, as is often the case, your loan portfolio is all the “same way round” — if you are borrowing from, but never lending to, a lender in a gross jurisdiction, then netting doesn’t really do anything for you. Your problem will be your {{gmslaprov|collateral}} [[haircut]], for which you will be an unsecured creditor of the lender. To fix this, a pledge GMSLA is what you are looking for.  


===Non-affected party’s option===
Note that {{gmslaprov|mini close-out}} is the [[non-affected party|non-affected party’s]] option: If a {{gmslaprov|Borrower}}, on terminating a {{gmslaprov|Loan}}, cannot then redeliver the borrowed {{gmslaprov|Securities}} (because of an upstream failure), it cannot force a {{gmslaprov|mini close-out}}.
Note that {{gmslaprov|mini close-out}} is the [[non-affected party|non-affected party’s]] option: If a {{gmslaprov|Borrower}}, on terminating a {{gmslaprov|Loan}}, cannot then redeliver the borrowed {{gmslaprov|Securities}} (because of an upstream failure), it cannot force a {{gmslaprov|mini close-out}}.


'''Odd spot''': See the peculiar impact [[mini-closeout]] has on {{isdaprov|Default Under Specified Transaction}} under the {{isdama}}.
'''Odd spot''': See the peculiar impact [[mini-closeout]] has on {{isdaprov|Default Under Specified Transaction}} under the {{isdama}}.
{{seealso}}
*[[GMSLA Netting]]
*[[Pledge GMSLA]]
*{{isdaprov|DUST}}
Retrieved from "https://jollycontrarian.com/index.php?title=Special:MobileDiff/24714"

Navigation menu